Nuclear Decommissioning Authority loses High Court case vs EnergySolutions on £7bn Magnox contract

The Nuclear Decommissioning Authority (NDA) has lost its High Court case vs Energy Solutions for the awarded £7bn Magnox contract.

The full report can be found here:

http://www.bailii.org/ew/cases/EWHC/TCC/2016/1988.html

THE HONOURABLE MR JUSTICE FRASER

XII Summary of findings

  1. I include at Appendix 4 a list of the corrected scores both for the RSS and CFP tenders in respect of all the different requirements. This collates the answers to all of Issues 5 to 72.
  2. So far as Agreed Issues 3 and 4 are concerned, the answers are as follows:
      1. Agreed Issue 3:

(i) The effect of the answers on the CFP Threshold Issues is that CFP ought to have been disqualified if the NDA had properly applied the terms of the SORR to CFP’s Tender Submissions for Requirements 306.5.1(j) and 401.5.1(b)(ix). The effect of my findings on the RSS Threshold Issues is that there was no reason why the NDA ought to have disqualified RSS.

(ii) The final scores can only be decided once the appropriate weighting has been applied to the different Requirements to result in an overall score for each of RSS and CFP, and the parties are agreed that exercise is to be performed by them jointly such than an agreed percentage score can be arrived at after applying the findings in this judgment.

(iii) Although any conclusion arrived at by applying and comparing the percentage scores can only be reached once that agreed exercise is done by the parties, based upon my findings about disqualification of CFP in Agreed Issue 3(i) the Transition Agreement ought to have been awarded to RSS.

Agreed Issue 4: It was agreed by the parties at the conclusion of the trial that further submissions would be required on the question of whether any unlawfulness (whether individually or cumulatively) constituted a sufficiently serious breach to give rise to a liability in damages (assuming that to be a requirement of such liability) to deal with the second of the so-called Francovich conditions dealt with in paragraph 13 of this judgment. That is to deal with a contingent situation concerning the extant appeal to the Supreme Court.

XIII Conclusion

  1. The NDA stated the following in paragraph 18 of its Written Opening:
      1. “This was by most standards a very detailed and sophisticated procurement exercise, which took nearly 2 years (including a 4 month evaluation period) and for which a budget of £6 million was allocated.”

When the different number of Requirements within each Level 3 Evaluation Node are considered, in total for all the bidders the SMEs between them evaluated over 2,100 separate Requirements. Given the context, it was particularly important that the competition was conducted in proper compliance with the relevant legal obligations, which are designed to ensure fair competition and transparency. There is an obvious public policy benefit in important public contracts being awarded to the most economically advantageous tenders. It was important that evaluation of the tender responses was done in accordance with the rules of the competition and the SORR, and in accordance with the obligations of transparency and equal treatment which were upon the NDA. As I have found in the body of this judgment, this did not occur and my findings are that the NDA fell short in a number of respects.

  1. The NDA urged upon me in submissions the point that the SMEs were “all doing their best”. I have recorded my views on the different witnesses who appeared in the trial in Part VI of this judgment. Whatever the reason or reasons behind the failures that occurred in this competition – and excessive workload on a few individuals may have been one explanation for at least some of the problems – there is, in my judgment, no escaping the fact that applying the correct legal test to the evaluation exercise leads to the scores having to be reconsidered, with some of them changing. There were many manifest errors by the NDA SMEs in the evaluation of the RSS tender with the result that the RSS score is, as a result of this judgment, to be increased. On some Requirements, RSS was treated quite differently and less advantageously than CFP. Indeed, the NDA had conceded in any event that the RSS tender score had to be increased as a result of Requirement 5.9(c) for both Nodes 110 and 112 in Agreed Issue 37.
  2. CFP should also have been disqualified from the competition, by application of the very rules contained within the SORR that the NDA itself drew up that governed the competition. The SMEs themselves realised during the evaluation process the draconian effects of the NDA’s own rules upon the CFP bid, so far as the Threshold Requirements were concerned. They sought guidance from the Core Competition Team and a way was found to avoid disqualification of CFP. In my judgment the NDA sought to avoid the consequence of disqualification by “fudging” the evaluation of those Requirements to avoid reaching a situation where CFP would be given a “Fail” or “Below Threshold” score. By the word “fudging”, I mean choosing an outcome, and manipulating the evaluation to reach that outcome. This was by choosing a score high enough to avoid that undesirable outcome, rather than arriving at a score by properly considering the content of the tender against the scoring criteria. If that were to be the approach during the evaluation – some sort of institutional reluctance by the NDA to score a Requirement correctly, if that were to result in a score “Below Threshold” or a “Fail” – one wonders why the NDA imposed such terms within the SORR in the first place. The NDA was the architect of its own misfortune in that respect.
  3. Further, in four instances (which is a small number of cases) the CFP score should be reduced because the score awarded by the SMEs was manifestly erroneous.
  4. It is notable in my judgment that seven of the Nodes appear both in the Energy Solutions’ challenge to the RSS score, and also the challenge to the CFP score. They are Nodes numbered 112, 303, 306, 307, 405, 410 and 411.
  5. The consequences of this change of score upon the percentage result of the tender has been agreed by the parties. After the appropriate weighting is applied to the new scores, the results of the procurement competition as adjusted (and without taking account of the disqualification of CFP that I have found should have occurred) become 91.48% for RSS and 85.56% for CFP. Accordingly, the most economically advantageous tender was that of RSS. The consequences of these findings mean that these proceedings between these parties will continue to the next stage, namely directions and resolution of the quantum of damages.

 

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